In the early days of 2020, when rumors pointed to a worldwide pandemic, businesses were forced to make a difficult decision; do we continue to do business as usual, or do we invest the time and strategy required to reinvent our business operating model?
Before 2020, a number of top website building platforms that we all know quite well, were gradually growing in market share and brand presence. Just a few months into 2020, they exploded in popularity as businesses who looked ahead to the forecast of COVID-19’s impact on the economy and in-person shopping, turned to the digital tools available to them. In a recent report from Statistics Canada, it revealed that, “retail e-commerce sales reached a record $3.9 billion in May in Canada, a 2.3 percent increase over April, and a 99.3 percent increase over February ($2.0 billion).”
Now let us consider the return on investment (ROI) of what many believed to be a brilliant move made by the companies who jumped at the chance of offering their products online. The average cost per square foot of retail space in Canada’s largest city, Toronto, is approximately $22.30. Multiply this by 2000 square feet, and a business is looking at spending just shy of $45,000 per year on rent, not including any other premise-related expenses. Compare that to the offerings provided by website building platforms, and the cost to create an e-commerce store to sell products is minimal. The difference in expenses is wide, and many of the businesses who chose to invest in new tools saw a massive return on their online investment.
When a business is tasked with calculating their return on investment (ROI), they think of cost versus income ratio. For example, a marketing strategy may cost $25,000 to deploy, yet the ROI may reach $500,000. Proof of obtaining a healthy ROI, therefore, becomes a key decision-maker. It is used to determine if a business should move forward with investing in a specific product, service or tool, in hopes of being rewarded with an increase in income and a more significant competitive advantage. In short, it allows you to calculate how quickly the investment will pay for itself!
ROI, however, applies to much more than income. It applies to aspects such as productivity, employee retention rates, customer service and market share to name a few others. When a business can operate at peak efficiency and conduct internal and external operations with proficiency, wasted time and wasted dollars are no longer a recurring concern.
Calculating ROI is simple as it considers the cost versus the investment, but what if you can invest in innovative technologies and save expenses elsewhere? One of the primary motivations for investing in an ERP cloud-based platform is to bring financial and operational data your team needs into a secure, protected, and integrated platform. No matter where your team is working, they can have access to real-time information, documents, and analytics that they can utilize to determine what in the business is working, what is not, and identify the major pain points that must be resolved. Decreasing profit leaks and identifying pain points early on can save countless hours of pursuing under-performing initiatives or even locating the most simple of documents. Time is money, and if an organization is unable to provide employees with what they need when they require it, they are wasting both time and money.
A 2012 report released by the McKinsey Global Institute revealed that nearly 20% of time is wasted per week, per employee, in searching for information. Take this one step further and consider the time required to utilize this information once acquired! ERP’s help companies bring data, departments, and individuals together, allowing your business’ expansive nature to be organized and streamlined into a complex yet easy-to-use platform. Furthermore, ERP’s can reduce the time required to locate and analyze much-needed information by over 50%, allowing employees to spend less time searching for data and more time doing their best work.
Integrating an ERP into your company’s day to day activities may be perceived as complicated and overwhelming, but leading ERP solutions are compatible with many of the tools already available to businesses. For example, integrating an ERP with an existing point of sale (POS) application not only allows you to use a system that is already in place, but it assists teams in making informed business decisions based on accurate data. If you are interested in learning how an ERP can help team members, streamline operations, coexist with current technologies and save you both time and money, contact us. We will share critical insights and information to assist you in making an educated decision while saving time in the process.
Part 2 of this blog will take a deeper dive in to how ERP can grow your ROI and help bolster the business case to your stakeholders on why you should invest in one for your business.
Request a free consultation to explore the ROI of an ERP solution for your organization.